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THE FOREIGN INVESTMENT ENVIRONMENT IN THE BALTICS AND THE CIS

 THE FOREIGN INVESTMENT ENVIRONMENT IN THE BALTICS AND THE CIS
 FRANKFURT, Germany, Aug. 19 /PRNewswire/ -- As a follow-on to its recent review of the foreign investment environment in eastern Europe, Deutsche Bank Research has just published two surveys of rules and regulations affecting foreign investment in the former Soviet Union. The first one covers the CIS states of Russia, Kazakhstan, Belarus and Ukraine, and the other one covers the Baltic states of Latvia, Lithuania, and Estonia. Part of the institute's regular "Focus: Eastern Europe" series, these reports were compiled with the assistance of the Financial Institutions Department of Deutsche Bank AG.
 In a series of tables devoted to each of the seven countries, DB Research explains the legal framework surrounding foreign investment laws and summarizes the regulations governing types of businesses, levels of foreign participation, rules on profit repatriation, and taxation.
 The tables also detail the incentives which some countries have instituted in the form of tax breaks and exemptions.
 Some highlights:
 Russia, Kazakhstan, and Belarus will grant special tax breaks and concessions to firms operating within special economic and free trade zones, writes DB Research. Although total percentages remain unclear, exporters must sell approximately 50 percent of foreign exchange revenues to banks authorized to build up Russia's foreign currency reserves. The Russian government is considering granting foreign-held firms exemption from the hard currency sales requirements.
 In Ukraine, fully foreign-owned firms may reduce taxable profit by the value of effective investment made there. Should the sum be higher than the year's profit, the surplus can be deducted from the profit of the following years.
 In Lithuania, companies founded before the end of 1993 receive a 70 percent reduction in the normal tax rate of 35 percent for five years and a 50 percent reduction for the following three years. Land leases are to be granted for 99 years, and foreign investments may not be nationalized.
 In Estonia, firms with over 50 percent foreign participation receive a three-year tax exemption and pay only 50 percent of the normal 15-30 percent tax rate for the following five years. Foreign- owned firms do not require a license to export goods. However, DB Research adds that it has not been determined whether foreign firms will be exempt from the law requiring all exporters to sell 20 percent of foreign currency receipts to the Estonian foreign currency fund and 5 percent to local authorities at an exchange rate set by the Bank of Estonia.
 DB Research writes that companies in Latvia with over 30 percent foreign capital participation are exempt from taxes for two years -- three years if they fall within one of the government's priority areas such as energy, transport, and communications -- and pay only half the normal tax rate of 15-35 percent for the following two years.
 For a copy of the complete text, contact Ute DeFarlo, TransAtlantic Futures, Inc., Washington, D.C., 202-462-1222 or fax, 202-462-1229.
 -0- 8/19/92
 /CONTACT: Andreas Gummich, 011-49-69-71007-217, or Peter Puhl, 011-49-69-7150-5894, in Frankfurt, of Deutsche Bank Research/ CO: Deutsche Bank Research ST: IN: FIN SU:


IH -- DC012 -- 1272 08/19/92 10:28 EDT
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Date:Aug 19, 1992
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